As we get older, the inevitable eventually begins to happen: our mental and physical capabilities wither. For many, these deteriorations may require someone else to step in and think and make decisions for them. If you were ever in a situation where you had to make important decisions regarding your assets, health care, and finances but lacked the capacity to do so, who would you want to make the decisions and take charge of you?
This is where an agreement called a Power of Attorney (“POA”)comes into play.
A Power of Attorney document is a written authorization allowing you, the principal, to formally appoint another trusted individual, an agent, to make important decisions and act on your behalf in the case that you are unable to do these things yourself. This agent can have either broad or limited power to make decisions about the principal’s finances, property, medical care, and so forth. The power of attorney becomes an option when one becomes either temporarily or permanently physically or mentally incapacitated.
Who can be a power of attorney for a principal?
The person selected is usually a spouse, adult child, or another close relative or friend. As an appointed agent, this individual is expected to make informed decisions in good faith in critical issues. Therefore, whoever is appointed as an agent, the individual should be one that the principal wholeheartedly trusts to make serious decisions in their best interests. In most cases, only one agent is appointed at a time. Still, it is important to have a backup: agents could become unable to serve when the time comes due to an illness, injury, or any other reason, so having another individual who is willing to take on the title is crucial as either a backup or as an
Regarding the agent’s legal responsibility, an agent is only held responsible for intentional misconduct, not for unknowingly doing something wrong. This agent protection encourages people to accept agent responsibilities, as most agents are not compensated for their service.
What ends the agreement?
A power of attorney can end for numerous reasons, such as when the principal dies, the principal revokes the decision to appoint, a court invalidates it for some specific reason, in the cases of divorce if the agent is a spouse, or if the agent cannot continue to carry out the responsibilities given to them for some reason or another.
Types of POAs
There are generally four categories of power of attorney agreements:
· General Power of Attorney: a general power of attorney gives an agent broad powers to act on a principal’s behalf. Such powers include handling financial and business transactions, life insurance decisions, making gifts, and employing professional help such as lawyers and caretakers.
· Specific Power of Attorney: Under this setup, a principal specifies precisely what powers an agent may exercise-thus the “specific” title. An agent’s powers are limited to what the principal specifically appoints them to do in the agreement.
· Health Care Power of Attorney: the health care power of attorney grants an agent authority to make medical decisions for the principal if they are unconscious, mentally incompetent, or unable to make decisions for another reason. In New York, this is called a Healthcare Proxy.
· Springing Power of Attorney: A Springing Power of Attorney is a type of durable Power of Attorney document that only comes into effect after certain conditions are met, e. g., when the Principal becomes disabled or mentally incompetent. The 2021 Power of Attorney is a durable power of attorney that becomes effective once the Agent(s) are signed. However, practitioners have the option of including_’springing’_language in the Modifications section, which would determine alternate conditions under which the Power of Attorney would become effective.
· Durable Power of Attorney: If one becomes mentally incompetent while having a power of attorney in effect, a durable power of attorney document can be signed to safeguard against any problems and ensure that the original power of attorney remains in effect. This POA is a general, special, or health care POA that has a durability provision to keep the current power of attorney in effect.[1]
How do I make a power of attorney agreement legally binding?
To set up a legally binding power of attorney, the principal must first have sufficient mental capacity when the document is formed. Second, a power of attorney must be signed before a licensed notary public to become legally binding.[2] Finally, you must also certify several copies of the document. The process is not complicated, but small mistakes can cause validity issues and confusion that you will want to avoid.
Are There Any New Developments with Power of Attorney Agreements?
Always be sure to check your state requirements and provision. Recently, in New York, there have been some changes regards to Power of Attorney. It may now substantially conform rather than contain the exact wording of section 5-1513 of the General Obligations Law.
As you go through securing a power of attorney agreement, you want to be sure you follow all the necessary steps to avoid having the agreement invalidated. The best way to ensure that you are following the correct procedures is to secure help from a legal professional who is skilled and trained in estate planning: contact Laizure Metz Legal Services at Christopher@laizuremetzlegal.com or (347) 625-7854.
[1] “What is a Power of Attorney?” https://www.legalzoom.com/articles/what-is-a-power-of-attorney. Accessed August 16, 2021.
[2] “Everything you need to know about powers of attorney.” https://www.notarize.com/power-of-attorney. Accessed August 16, 2021.